Study on the Presence of Middle Income Trap in E7 and Fragile Five Countries

Abstract

This study aims to investigate whether E7 and Fragile Five countries are in the middle-income trap or not by using various methods and comparison techniques. The study is based on the classification created by Felipe, Abdon and Kumar using the middle-income trap threshold values approach by obtaining growth rates, income transitions and times over historical data of countries. This study first focuses on the approaches that lay down the theoretical basis of the middle-income trap. In the following sections, in order to explain the middle-income trap in the context of quantitative indicators, various approaches such as the threshold approach. Furthermore, the overall assessment is made after comparing the GDP per capita of those countries with the average world middle income GDP per capita. In the light of the middle-income trap definition of being stuck at 20% of per capita GDP of the USA, the per capita GDP of respective countries are compared against the per capita GDP of the USA. In addition, in line with the approach that takes the world average per capita income as the basis for middle income, the per capita GDPs are compared against the world average per capita GDP values, and relevant assessments are made.